……it replaces it with a new payments system that will cause the sickest Medicare patients to suffer the most. The bill’s new payment system is based on three Medicare programs: the “Physician Quality Reporting Program,” the “Value-Based Modifier,” and “Meaningful Use of Electronic Health Records,” all of which are supposed to improve the quality of treatment for Medicare beneficiaries. None of these programs have demonstrated any qualityimprovements on their own, yet the MACR now seeks to lump them all into one program called the “Merit-Based Incentive Payment System” (MIPS).

…… the House’s doc fix is an amalgam of temporary solutions to a host of health policy issues, special interest subsidies, and a promise of better health care for seniors—but not for at least five years. It may improve the way Medicare reimburses docs for the services they provide, but it won’t fix the problem.

Under the House bill, Medicare payments to docs would rise by 0.5% in each of the next four years—a rate that is likely to be well below inflation. Then, payments would be frozen for the next six years. After that, physicians would get modest annual increases again. Want to bet on that structure holding up?

Not only is the bill extremely costly, but it is also flawed in its design. Doctors care deeply for patients and will continue to provide excellent service to them. Yet in order for doctors to be paid fairly for such services, H.R. 2 would require them to comply with burdensome checklists and documentation requirements in order to receive payment.

The Senate will have an opportunity to propose a real Medicare doc fix when it meets again on April 13.

]]>http://healthblog.ncpa.org/critics-pile-on-flawed-medicare-doc-fix/feed/0http://healthblog.ncpa.org/critics-pile-on-flawed-medicare-doc-fix/Budget Gimmicks Hide the $213 Billion Cost of Medicare Doc Fixhttp://feedproxy.google.com/~r/HealthPolicyBlog/~3/n6ATpy0Y8qU/
http://healthblog.ncpa.org/budget-gimmicks-hide-the-213-billion-cost-of-medicare-doc-fix/#commentsMon, 30 Mar 2015 16:21:23 +0000http://healthblog.ncpa.org/?p=40313The headline of the Congressional Budget Office’s (CBO) damning assessment of the fiscal damage done by H.R. 2 — the so-called Medicare doc fix negotiated secretly by House Speaker John Boehner and Minority Leader Nancy Pelosi — is that the deal will add $141 billion to the deficit over the next ten years.

Even this appalling outcome is sugarcoated. After unpacking the gimmicks underlying the estimate, the actual result is much worse.

First, the worst gimmick: The bill increases spending on the Children’s Health Insurance Program (CHIP) by almost $40 billion. Yet, the CBO only includes less than $6 billion in its estimate of the bill’s costs. How did over $34 billion of CHIP spending simply vanish into thin air? Easily! Much of it was already in the baseline.

Welcome to the weird world of federal budgeting, where the so-called baseline is the source of much mischief. Recall the entire reason Congress had to patch Medicare payments to doctors at least once a year for over a decade is because the budget baseline was determined by an unrealistic formula called the Sustainable Growth Rate (SGR).

Because that formula would have led to pay cuts that would have made it uneconomical for physicians to see Medicare patients, Congress had to increase physicians’ fees beyond the baseline. Most importantly, until now, those pay increases have been paid for by spending offsets.

Physicians never had their Medicare pay cut to the level dictated by the baseline. There was simply no crisis that had to be averted by last week’s budget busting Medicare doc fix.

Following the rules for developing baseline projections of programs with such expiring funding authority, CBO’s projections reflect the assumption that CHIP will continue to be funded so as to operate as it will under the law in effect immediately before the date after which no new budget authority is provided.

The baseline derives entirely from an assumption that CHIP will continue, even though there is no legal basis for that assumption. For the Medicare doc fix, on the other hand, which is continuously re-authorized, there is no such assumption.

There is no economic logic behind the different treatment of the two programs in the baseline. However, it allowed the House of Representatives to get CHIP at a fire-sale price and disguise the true cost of the Medicare doc fix.

I arrive at a net cost of $214 billion, not $141 billion, by adding the actual amount of spending described by the CBO, without the CHIP budget gimmick. That makes $248 billion. Then, I subtracted the $34 billion revenue from higher Medicare premiums charged to high-income households.

The CBO estimates costs will be further reduced by a $38 billion cut to hospitals and post-acute care facilities. I discount that figure to zero, which may be too pessimistic. Nevertheless, the one thing we know about the government-medical complex is the coalition will always come together at any opportunity to increase the amount of money it taxes people, even if it initially appears some members of the coalition will have to pay in to the pot themselves. Once the deed is done, they cry poverty and manage to claw their money back.

The fiscal horror of the Medicare doc fix passed by the House last week is one reason to reject it. A patch of no more than two years, which would mirror the CHIP extension, would be more than adequate to give Congress time to consider more fundamental Medicare reform.

]]>http://healthblog.ncpa.org/budget-gimmicks-hide-the-213-billion-cost-of-medicare-doc-fix/feed/3http://healthblog.ncpa.org/budget-gimmicks-hide-the-213-billion-cost-of-medicare-doc-fix/Canadians Leave Canada for Medical Carehttp://feedproxy.google.com/~r/HealthPolicyBlog/~3/I_Ch6uqoq8s/
http://healthblog.ncpa.org/canadians-leave-canada-for-medical-care/#commentsMon, 30 Mar 2015 14:00:32 +0000http://healthblog.ncpa.org/?p=40295Canada’s government monopoly of health insurance leads to long waits, and an increasing number of Canadians have to leave the country to get care, according to The Fraser Institute:

In 2014, more than 52,000 Canadians received non-emergency medical treatment outside Canada.

Across Canada, neurosurgeons reported the highest proportion of patients (in a specialty) travelling abroad for treatment (2.6%). The largest number of patients (in a specialty) travelled abroad for internal medicine procedures (6,559).

One explanation for patients travelling abroad to receive medical treatment may relate to the long waiting times they are forced endure in Canada’s health care system. In 2014, patients could expect to wait 9.8 weeks for medically necessary treatment after seeing a specialist—3 weeks longer than the time physicians consider to be clinically “reasonable” (6.5 weeks).

The equivalent number of Americans would be about half a million, given the different sizes of the populations. According to the Centers for Disease Control and Prevention (CDC), 750,000 Americans travel abroad for medical care. However, their needs are very different: Cosmetic surgery, not brain surgery, is the largest reason.

]]>http://healthblog.ncpa.org/canadians-leave-canada-for-medical-care/feed/2http://healthblog.ncpa.org/canadians-leave-canada-for-medical-care/Churn, Churn, Churn: Measuring the Cost of Fragmented Coveragehttp://feedproxy.google.com/~r/HealthPolicyBlog/~3/cnZNq8mKd9o/
http://healthblog.ncpa.org/churn-churn-churn-measuring-the-cost-of-fragmented-coverage/#commentsFri, 27 Mar 2015 22:00:31 +0000http://healthblog.ncpa.org/?p=40288Low-income Americans face bewildering bureaucratic requirements when they try to obtain welfare benefits. One of the challenges is that they have to frequently re-apply for benefits because the state needs to know whether their incomes are still low enough form them to remain eligible. This moving in and out of benefits is called churn, and Dottie Rosenbaum of the left-wing Center for Budget and Policy Priorities has written an interesting paper discussing the challenges in measuring and understanding it:

States renew Medicaid and CHIP eligibility once a year, as federal rules require, and federal rules have changed to require a minimum eligibility period of 12 months for child care. Many states still review SNAP eligibility every six months……

States are allowed to recertify eligibility of elderly and disabled households for SNAP every 24 months.

There is trade-off here: If people have too much hassle re-applying for fragmented benefits they might not get them and that will cost taxpayers more down the road. On the other hand, welfare that depends on income demands some burden of re-certifying eligibility on the recipient.

NCPA recently published an analysis of the bewildering array of federally funded safety-net programs, and recommended that state, local, and civic agencies be able to apply for block grants that consolidate funding from multiple programs. This would also reduce the challenge of churn, as applicants would be able to re-certify eligibility at one agency.

]]>http://healthblog.ncpa.org/churn-churn-churn-measuring-the-cost-of-fragmented-coverage/feed/0http://healthblog.ncpa.org/churn-churn-churn-measuring-the-cost-of-fragmented-coverage/Health Insurers Just Fine Under Obamacarehttp://feedproxy.google.com/~r/HealthPolicyBlog/~3/_xUn5JmFjcI/
http://healthblog.ncpa.org/health-insurers-just-fine-under-obamacare/#commentsFri, 27 Mar 2015 21:00:22 +0000http://healthblog.ncpa.org/?p=40277New research from the Commonwealth Fund, a pro-Obamacare think tank, shows that health insurers are doing just fine under Obamacare.

Well, the stock market has been telling us that for years. The report’s purpose is to cheer the rebates that insurers which made too much money paid to consumers. Obamacare regulates the Medical Loss Ratio (MLR). If an insurer does not spend enough premium on medical claims, it has to pay a rebate to its beneficiaries.

Rebates have collapsed from over $1 billion in 2011 to $325 million in 2013. The report concludes that Obamacare caused insurers to reduce their overhead expenses and profits. Actually, there is less to this story than meets the eye. Exhibit 5 shows that there has been very little change in insurers’ income statements over the three years.

The operating margin (underwriting margin/net premium) declined from 2.5 percent to 2.3 percent. However, what the analysis neglects is that insurers experienced a significant reduction in risk. That is what the stock market has been telling us.

Exhibit 6 shows how badly the individual market has been hit: Administrative expenses increased from $3.4 billion to $4 billion, an increase of 17 percent. Underwriting losses tripled from $400 million to $1.2 billion.

That individual market, of course, was destroyed by Obamacare. The insurers that remain are doing very well.

]]>http://healthblog.ncpa.org/health-insurers-just-fine-under-obamacare/feed/0http://healthblog.ncpa.org/health-insurers-just-fine-under-obamacare/Honor Roll: 37 Voted Against the Budget Busting Medicare Doc Fixhttp://feedproxy.google.com/~r/HealthPolicyBlog/~3/w7ZUvr045Ns/
http://healthblog.ncpa.org/honor-roll-37-voted-against-the-budget-busting-medicare-doc-fix/#commentsFri, 27 Mar 2015 19:48:35 +0000http://healthblog.ncpa.org/?p=40272“While I support an SGR replacement, I cannot vote in favor of a bill that costs more than $200 billion, while Congress only pays for $70 billion, leaving more than $130 billion to our children and grandchildren. We cannot continue to solve every problem by adding to the deficit,” Rep. Jim Bridenstine (R-Okla.) said in a statement.

The 37 Congressmen who voted against include high-ranking Republicans Darrell Issa and Jim Jordan.

]]>http://healthblog.ncpa.org/honor-roll-37-voted-against-the-budget-busting-medicare-doc-fix/feed/0http://healthblog.ncpa.org/honor-roll-37-voted-against-the-budget-busting-medicare-doc-fix/With Medicare Doc Fix, House Republicans Move Left of Obama on Health Reformhttp://feedproxy.google.com/~r/HealthPolicyBlog/~3/pvXZMQWD1RU/
http://healthblog.ncpa.org/with-medicare-doc-fix-house-republicans-move-left-of-obama-on-health-reform/#commentsFri, 27 Mar 2015 14:24:04 +0000http://healthblog.ncpa.org/?p=40262The fallout from yesterday’s House vote to bind our children and grandchildren further into debt servitude to bail out an unreformed Medicare continues.

Before the vote, Chris Jacobs of America Next (Louisiana Governor Bobby Jindal’s think tank) warned that Medicare could not survive reform if the so-called “doc fix” passed. Writing after the unfortunate vote, Jacobs explains that House Republicans have actually moved left of Obama on Medigap reform:

The House legislation responds to this by making some types of Medigap coverage illegal. It would prohibit the sale or issuance of any policies that insulate beneficiaries from the Medicare Part B deductible of $147.

In contrast, the Obama administration’s budget plan took a more conservative approach to this problem. It proposed a “premium surcharge for new beneficiaries beginning in 2019” choosing first-dollar Medigap coverage. Under its approach, insurers could still offer, and seniors could still purchase, insulating Medigap insurance—but they would have to repay taxpayers for additional Medicare spending engendered by their generous supplemental coverage.

The Committee on a Responsible Federal Budget (CRFB) has extended the estimate of the bill’s fiscal effect to twenty years, double the ten years covered by the Congressional Budget Office. The result? $500 billion added to the debt.

Most encouraging is U.S. Senator Ben Sasse, who has written an excellent op-ed in Politico condemning the House GOP for rejecting its own budget resolution in favor of the seriously flawed doc fix:

Unfortunately, the House’s SGR package misses an opportunity to solve Medicare’s underlying problems. Rather than offering bold policy solutions, this bill relies primarily on command-and-control bureaucracy. It substitutes the flawed SGR formula for more than 120 pages of new rules to govern the practice of medicine. (While I support the goal of paying for quality and results, I have little faith in Medicare bureaucrats’ actually achieving that objective.)

Let’s hope that Senator Sasse will not stand alone when the U.S. Senate takes up this disastrous bill.

What can be done to rescue victory from defeat? Amend the legislation such that the doc fix is limited to two years, mirroring the Children’s Health Insurance Progam (CHIP) extension in the House bill.

This would buy enough time for the next president to sign effective reforms, as proposed in the GOP’s budget resolutions.

]]>http://healthblog.ncpa.org/with-medicare-doc-fix-house-republicans-move-left-of-obama-on-health-reform/feed/2http://healthblog.ncpa.org/with-medicare-doc-fix-house-republicans-move-left-of-obama-on-health-reform/The GOP’s Proposed Budgets’ Effect on Medicare and Medicaidhttp://feedproxy.google.com/~r/HealthPolicyBlog/~3/vQCRkAJjnkU/
http://healthblog.ncpa.org/the-gops-proposed-budgets-effect-on-medicare-and-medicaid/#commentsThu, 26 Mar 2015 21:44:07 +0000http://healthblog.ncpa.org/?p=40257Today’s appalling vote in favor of a so-called Medicare doc fix that will increase the deficit by $141 billion makes it hard to take the House and Senate budget resolutions seriously. Nevertheless, they have a lot of positive reform in them. Sean Parnell of the Heartland Institute interviewed me for the Heartland Institute’s podcast.

The interview happened a few days ago, before we knew that almost all House Republicans were about to vote to endorse Obamacare’s vision of controlling Medicare by federalizing the practice of medicine. Nevertheless, if the Republicans ever re-gather their bearings. maybe they will move their budget forward.

]]>http://healthblog.ncpa.org/the-gops-proposed-budgets-effect-on-medicare-and-medicaid/feed/0http://healthblog.ncpa.org/the-gops-proposed-budgets-effect-on-medicare-and-medicaid/How Conservatives Rationalize the Budget Busting Medicare Doc Fixhttp://feedproxy.google.com/~r/HealthPolicyBlog/~3/eCBHg8uNl-c/
http://healthblog.ncpa.org/conservatives-rationalize-the-budget-busting-medicare-doc-fix/#commentsThu, 26 Mar 2015 20:34:07 +0000http://healthblog.ncpa.org/?p=40248Opposition to the outrageous so-called Medicare doc fix bill, which will increase the deficit by $141 billion, is growing. Michael Cannon of the Cato Institute explains how this will “bust the budget.” My Forbes editor, Avik Roy, pleads that the Senate stop this monstrosity (which passed the House by a huge majority).

On the other hand, there are those unfortunate conservatives who endorsed the bill before the Congressional Budget Office (CBO) had announced what a budget buster it was. My friend Ryan Ellis of Americans for Tax Reform appreciates that the CBO score could give us a feeling of “whiplash”.

Let’s start with the CBO score. Under a “current law” baseline (wherein CBO assumes that physician reimbursements will be cut 21 percent next week and stay cut forever), H.R. 2 is a ten-year spending increase of $141 billion, because the law would do away with that 21 percent cut and the government would have to pay doctors more. Under a more realistic baseline in which doctors don’t face a 21 percent Medicare cut next week (or ever), H.R. 2 is a ten-year spending cut of $1 billion. That’s because in this scenario, elimination of the 21 percent cut is already included in the baseline, so it doesn’t count as new spending. So it really comes down to deciding which starting point (another term for baseline) you think is more reasonable. I think the more reasonable starting point is that Congress won’t let next week’s 21 percent reimbursement cut happen (a safe bet, since they’ve avoided it 17 times since 2003).

What Mr. Ellis ignores is that previous patches to the SGR, which only lasted up to a year (not in perpetuity, like this one does) were always paid for by offsets to other spending. The success rate was 98 percent.

If a tenant in an apartment building were to adopt this approach, it would go something like this:

I pay $1,000 month in rent. But I don’t want to accept that reality because I made a commitment many years ago to pay only $750 in rent. I know that is a fantasy, so I only budget one to twelve months in advance, because I know I have to scrounge around and find $250 every month by cutting spending on other things. That has become too painful for me, so starting now I am going to budget $1,000 for rent for the next ten or more years, with no plan to earn more money or cut spending elsewhere.

It may be emotionally satisfying, but it is hardly a solution to the problem.

]]>http://healthblog.ncpa.org/conservatives-rationalize-the-budget-busting-medicare-doc-fix/feed/2http://healthblog.ncpa.org/conservatives-rationalize-the-budget-busting-medicare-doc-fix/97 Percent of Medicare Doc Fix Deficit Fundedhttp://feedproxy.google.com/~r/HealthPolicyBlog/~3/0z4DNblHMN0/
http://healthblog.ncpa.org/97-percent-of-medicare-doc-fix-deficit-funded/#commentsWed, 25 Mar 2015 21:00:19 +0000http://healthblog.ncpa.org/?p=40224Today’s Health Alert warned against the so-called Medicare doc fix that is being jammed through the Congress this week. The Health Alert was written and published before the Congressional Budget Office issued its estimate of the bill’s effect on the deficit.

Over the 2015–2025 period, CBO estimates, enacting H.R. 2 would increase both direct spending (by about $145 billion) and revenues (by about $4 billion), resulting in a $141 billion increase in federal budget deficits (see table on page 2). Although the legislation would affect direct spending and revenues, it would waive the pay-as-you-go procedures that otherwise apply.

Less than three percent of this spending binge is paid for. Over 97 percent is deficit financed. This is how Republicans are showing how they can govern, especially on health reform?

Not in my worst nightmare did I think the bill would be this outrageous. As they say in America: “You gotta be kidding me!”

Any politician who votes for this will surely not be considered a credible voice in the debate over post-Obamacare health reform.